Accountants need to focus on activities that have the biggest positive impact on the business. That leads to business resilience and taking all available opportunities – even in uncertain economic times.
But how do we know what to prioritize? There is so much that could be done in so many different areas.
Let’s simplify this complicated subject. First, we need to identify and understand the key ‘drivers’ (or activities) which influence success, especially related to revenue, profit, and enterprise value.
Driver 1: Lead Generation
Accountants need to create opportunities (or ‘leads’) whereby potential clients (prospects) show interest in their services. Many accountants don’t have the luxury of a ‘marketing department’ to generate these leads. They hope to be contacted by prospective clients (so-called ‘inbound leads’) but probably have to reach out through marketing campaigns (email, networking, referral campaigns, etc.)
QUALITY of leads is also important. A high quality lead is one which has a strong probability of becoming a client AND fits the definition of a target customer.
In a recent Panalitix webinar entitled ‘Marketing in a Crisis Environment: What Accountants Need to Know’, we suggested nine ways to generate leads in the current environment.
Example: Accountant A serves as ‘Chair of the Finance Committee’ of the local Chamber of Commerce. She interacts with many senior business people and has attracted numerous clients through that forum over many years.
Example: Accountant B specializes in business valuations and targets business owners through content marketing campaigns (e-books, guides, articles, interviews, webinars etc.) resulting in high-quality lead generation.
Driver 2: Sales Conversion
Not all business leads will become clients! Prospects have to be persuaded that the accountant can offer real value which could be a big decision, especially if they already have an accountant. Sales conversion rates are determined by many factors, including the ability of accountants to build trust and ‘speak to the needs’ of the prospect. Maybe the prospect wants speed, accuracy, business advice, friendship, technical skills, industry knowledge or a combination of these factors. Good sales processes are critical and many accountants can improve in this area. Panalitix publishes a Guide entitled ‘The Fundamentals of the Sales Function’ and you can access it below.
Example: Accountant C started using the Panalitix SalesPipeline to manage sales opportunities. This helped them prioritize which opportunities to pursue and made the partners accountable for each opportunity. Sales conversion rates and total sales volume improved.
Driver 3: Revenue Per Client
Setting price is critical to maximizing revenue per customer. Low prices are generally bad for business and invite questions about your credibility and the quality of your work. Raising price later may be difficult unless you have established excellent client relationships. The best situation is that your products are priced high enough to generate a good profit AND the customer believes they are receiving value for what they pay. Fixed price arrangements incentivize you to get more efficient and are generally preferred by clients. To access the Free Panalitix Guide to Pricing, click on the button below.
Revenue per customer should be viewed over the lifetime of the relationship which means up-selling and cross-selling should be built into the strategy. Setting average revenue targets for clients and releasing clients who are not meeting your revenue thresholds are good ways to increase this important metric.
Example: Accountant D aims to charge their clients double in year two compared to year one. And then double in year three compared to year two. In year one, they focus on a compliance package and then incorporate planning and profit optimization programs in year two. In year three, they seek out specific projects which are high revenue and high margin. They frequently review progress and strategize how to reach these goals. Not surprisingly, they have enjoyed growth rates well above industry averages.
Driver 4: Customer Retention
While acquiring a new client can be expensive and risky, retained (or ‘existing’) customers are a more secure revenue source that should grow over time. ‘Loyal’ customers will likely say good things about you and even provide referrals. In some senses, they become ‘part of your sales team’. On the other hand, accountants with high client churn (or ‘turnover’) have to replace departing clients and also face reputational risk.
Example: Accountant E experienced high churn rates and could not explain why, in spite of much internal discussion. They conducted a Panalitix client survey which showed clients felt they were not getting enough time with partners. A Client Communication Plan was developed and partners were required to reach out periodically to selected clients. 6 months later the client survey showed improvements and client churn was reduced.
Driver 5: Expenses
Accountants, like many businesses, are revisiting the way they work. What is the ‘value’ of the (physical) office going forward? Perhaps it will still be important but maybe the location and size will matter less? Is this an opportunity for cost-cutting? Personnel costs are usually the largest expense item on the P&L of an accounting business and might present savings opportunities. Some accountants have tried offshoring with success. Almost all businesses face opportunities to reduce expenses, which creates a more efficient organization and generally impacts the bottom line immediately.
Example: Accountant F reviewed the organizational chart to find that dedicated roles had been established for marketing, administration, reception / facilities management and Customer Service Coordination. These roles were consolidated into two positions resulting in immediate savings and no loss of efficiency.
So… which of these key drivers should you prioritize? Measuring the impact of a change in any of these drivers on the top line, bottom line, and business value is important. Each business is different and business conditions will also influence your approach. For example, you may need to cut costs in tough times and then focus aggressively on lead generation and sales conversion when the economy rebounds. One thing is certain: you will never optimize ALL of these drivers – so prioritization is critical.
We developed a guide and hope you’ll contact us to discuss how to get laser-focused on the activities which will drive success in your organization. GrowthEquation is designed to help with this for you and your clients.